2024 (9) TMI 1365 - AT - Customs

Violation of conditions of Carnet by not filing normal Bill of Entry for clearance of the same - alleged misdeclaration and misuse of carnet documents - Applicability of N/N.94/1996 dated 16.12.1996 - HELD THAT - There is a misdeclaration on the part of the appellant to the effect that the car was exported only for the purpose of repair and reimported thereafter. Since the appellant has accepted his liability on the value of his repairs, the demand of duty on repairs is confirmed. The Commissioner observing that no case of physical concealment within the car having been brough out, the car being available for examination by Customs and duties of Customs having already been paid on the car at the point of first import, denial of benefit of said Notification No.94/1996-Cus. dated 16.12.1996 would be travesty of justice . Having extended the benefit of the Notification No.94/1996 dated 16.12.1996 which is eligible for goods being exported for repairs, we do not find any reason for confiscating the vehicle nor imposition of penalty under Section 112(a) of the Customs Act 1962. Hence redemption fine and penalty is set aside. The Revenue challenging the additional grounds filed by the appellant for the first time regarding determination of duty submitted that the appellant had paid the entire amount of duty and thus, now cannot challenge the same having not taken up this issue before the adjudicating authorities. With regard to determination of duty since the issue has been raised for the first time and being a pure question of law. The impugned order is modified to the extent of allowing the redemption fine and penalty and appeal is remanded to the Commissioner to decide only on the additional ground raised before this Tribunal with regard to their liability to pay only basic customs duty - Appeal disposed off.

Summary

Issues:
1. Misuse of Carnet Scheme for duty-free import of a Ferrari car.
2. Alleged misdeclaration and misuse of carnet documents.
3. Confiscation of the vehicle under Customs Act, 1962.
4. Determination of duty payable on the imported vehicle.
5. Applicability of Notification No.94/1996 dated 16.12.1996.
6. Imposition of redemption fine and penalty under the Customs Act.

Analysis:

1. The case involves the misuse of the Carnet Scheme by the appellant, who exported a Ferrari car to UAE under the scheme for touring purposes but instead used it for repairs. The appellant sought duty-free clearance upon reimporting the vehicle to India, leading to investigations and denial of duty-free import benefit by the Commissioner.

2. The appellant's counsel argued that no misdeclaration occurred as the carnet was used for both export and reimport, and no Bill of Entry was filed for home consumption. The counsel contended that since the repairs were undertaken in Dubai, duty should be paid only on the repair value, not the entire vehicle value.

3. The Revenue contended that the appellant breached Carnet conditions by not filing a normal Bill of Entry, leading to objections on additional grounds raised by the appellant. The Revenue cited various decisions to support their argument of misdeclaration and ineligibility for duty exemption.

4. The Tribunal found that the appellant did misdeclare the purpose of exporting the vehicle for repairs instead of touring. However, since the appellant accepted liability for the repair value, the demand for duty on repairs was confirmed. The Tribunal also noted that the benefit of Notification No.94/1996 should apply in this case, leading to the setting aside of redemption fine and penalty.

5. The dispute over the duty payable, specifically regarding the applicability of Notification No.94/1996, was raised for the first time before the Tribunal. The Tribunal decided to remand the matter to the Commissioner for consideration of this issue, providing the appellant with a reasonable opportunity to present their case.

6. Consequently, the impugned order was modified to allow redemption fine and penalty, and the appeal was remanded to the Commissioner to decide solely on the additional ground raised regarding the liability to pay only basic customs duty, ensuring a fair hearing for the appellant.

This detailed analysis of the judgment highlights the key issues of misuse of the Carnet Scheme, alleged misdeclaration, duty determination, and the application of relevant customs notifications, providing a comprehensive understanding of the legal proceedings and the Tribunal's decision.